Independent Russian music site press conference and a new way of doing business, which includes a massive loss-leading promotion.

The company is giving away free albums and at 10:30 am Pacific, AllofMP3.com, run by Mediaservices, was being swamped with requests from music fans around the world, all eager to get in on the free download offer.

But behind the frenzy is a hard reality: if Mediaservices is hanging tough, so is the corporate music industry, backed by the might of the US government.

"I have a hard time imagining Russia becoming a member of the WTO and having a Web site [AllofMP3.com] like that up and running that is so clearly a violation of everyone's intellectual property rights," said US Trade Representative Susan Schwab recently, adding fuel to the fire lit and stoked by Warner Music, Vivendi Universal, Sony BMG and EMI.

Now AllofMP3.com's Visa and MasterCard authorizations have been blocked but, "Visa and MasterCard should immediately re-qualify AllofMP3," says AllofMP3.com director general Vadim Mamotin in a statement from Moscow. "There is no valid reason and absolutely no legal basis for the action."

Mediaservices says the "disqualification" of the "legal online music service," AllofMP3, by Visa International and MasterCard International (MA), "was based on preconceived notions about the company and that the companies lack justification for the action.

In a statement, Mediaservices quotes as Visa spokesperson as saying, "The action Visa has taken is in line with legislation passed in Russia and with basic international copyright and intellectual property norms."

"Clearly, Visa has misinterpreted the new copyright laws because they do not require AllofMP3 to alter its business model," says the site. "The new copyright laws do not prevent the online sale of music.

And, "MasterCard does not tolerate the use of its network for illegal activity," a spokesperson says, according to Mediaservices, responding:

If that is the basis for the company's decision, MasterCard's decision makes absolutely no sense since the company is a lawful business enterprise.

The company believes the action taken by the world's largest payment processors is arbitrary, capricious and discriminatory because Visa and MasterCard lack the authority to adjudicate the legality of AllofMP3's activities and its determination that the company's activities were illegal is patently erroneous and without legal merit. AllofMP3 has not been found by any court in the world to be in violation of any law.

It is evident that Visa and MasterCard made the decision on factors other than legal grounds since the decision was not based on an adjudicated verdict by any court in the Russian Federation or, for that matter, anywhere in the world. To disqualify AllofMP3 based on a payment processing company's whim is irresponsible and sets a bad precedence.

AllofMP3 will pursue every course of action, including legal options, to reverse Visa's and MasterCard's decision.

What, exactly, is Music for the Masses?

"It's a custom made desktop music player to play tracks, downloaded free of charge from Allofmp3.com," says the site. "You must be connected to the internet and have a valid allofmp3 login name and password to play these tracks.

"The tracks you download will play only under your account login and password. You may not share them because they are unusable by the other users."

Also See:
press conference - AllofMP3 conference transcript, October 19, 2006
lit and stoked - AllofMP3.com press conference, October 17, 2006
statement from Moscow - Visa and MasterCard Wrongly Disqualified Legal Online Music Service, October 19, 2006